Sen Snowe is correct in the suggestion that Small Business concerns should be addressed. In fact, here is evidence of how significant the health of the small business community is for our economy.

“Tsunami” Wave of Foreclosures in 2009 Will Take Self-Employed and Smaller Businesses

An NASE survey was the first to provide compelling evidence of small business involvement in the “toxic” mortgage crisis. The survey was created by Prof. Samuel D. Bornstein and Jung I. Song, CPA of Bornstein & Song, CPAs and Consultants in Oakhurst, NJ, and was conducted by the National Association for the Self-Employed (NASE) which issued a Press Release on 11/21/08.

According to this survey, it is estimated that 3,709,800 small business owners hold Alt-A and other “toxic” mortgages, and 1,279,800 are already delinquent as they have missed one to three or more monthly mortgage payments at this date before the expected “Resets” that are scheduled to begin in 4th Quarter 2008 through 2012. These small business owners will be at-risk of “payment shock” and default as their monthly mortgage payments skyrocket. Small business owners were especially targeted for these Alt-A loans which required little or no documentation of income which appealed to many small business owners who previously were unable to qualify.

The resulting defaults will be the cause of the upcoming second “tsunami” wave of foreclosures that will dwarf the subprime crisis and will take many homeowners and small business owners.

One key goal of this survey was to shed light on research completed by Prof. Bornstein that a significant number of small businesses are at-risk of mortgage default, due to the fact that they have “toxic” mortgages such as Alt-A, Alt-A ARMs, Option ARMs, Interest-Only, etc. Whereas subprime mortgages were issued to borrowers with low credit scores, these “toxic” mortgages were targeted to small business owners who were prime and near-prime borrowers.

The results of this survey highlight the fact that small business holds the key to mitigating the losses on the defaulting “Troubled Assets” in the TARP and Fannie Mae and Freddie Mac.

It is a tragedy when an individual borrower defaults on the mortgage and loses his/her home. The tragedy is magnified when the borrower is a small business owner, employing from 1 to 10 employees. The loss of jobs related to mortgage defaults and the resulting business failures will further weaken our economy and prolong the recession.

Small business is the job creation engine of our economy. Proactive efforts must be taken to provide small business owners with immediate and specific financial guidance, combined with other measures, to avoid default on mortgages and other debts in this critical and challenging financial crisis.

Alt A loans were the greatest thing to come around to small business owners in a long time. I got an Alt A with a 80/20 piggy back. Didn't have to put down a dime and walked away from the closing table with cash.

That was 5 years ago.Never missed a payment and never plan on it.Prevously getting a mortgage as a small business owner was very difficult. I hear those times are now returning.

The catalyst of the defaults was not necessary liberal credit extention, it was falling home prices.People paid way too much for a house especially in areas such as California, Miami, Las Vegas, etc. I paid $85 a square foot for my house, one that would have gone for $300 a square foot in parts of California. That's crazy!My big benefit is a lower Principal on the loan.

Now the home prices in California are dropping more to the point of what I paid per square foot. When they arrive at that point, then the market will begin to rebound.

12:28 am December 9, 2008

Bob Coleman wrote :

Wall Street has strong constituencies. Main Street should absolutely be represented in the cabinet.

7:50 pm December 10, 2008

Ann Sullivan wrote :

Senator Snowe is absolutely correct in calling for the SBA Administrator to be elevated to Cabinet status. Small business is not in a category by itself--its voice needs to be heard in every major policy discussion because of the effect policies have on a segment of the economy which is the only hope for economic growth at this time.

12:26 am December 19, 2008

Frank wrote :

The SBA does not represent Main St., so no, the SBA Administrator should not be a cabinet position. The SBA represents a cadre of players on the gov't dole, ie SBA loan brokers, seminar pushers, funds control companies, BDOs, etc. Elevating the SBA Admin to a cabinet position would only increase the strain on taxpayers for paying for the numerous SBA defaults. The SBA guarantees loans for less than 5% of the small businesses in America.

5:50 pm June 26, 2014

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8:23 pm June 26, 2014

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9:47 am February 20, 2015

Seiko Shin5ohara wrote :

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